Denison Mines: Phoenix ISR Project Now Construction Ready

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Denison Mines (DNN, DML) announced last Friday (January 2) that pending final regulatory approvals, it is ready to make a final investment decision (FID) and begin construction of the Phoenix ISR uranium mine, located in the Athabasca Basin. The company confirmed a two-year construction timeline and updated the initial capital cost estimate to reflect a modest 20% increase since the 2023 Phoenix Feasibility Study. Recall that as part of the final step in the federal regulatory process, the two-part public hearings with the Canadian Nuclear Safety Commission (CNSC) concluded on December 11, 2025. Denison is currently waiting for the CNSC's decision. Construction is ready to commence at any time now with initial ISR production expected in 2028. Given the numerous positive catalysts expected this quarter, we maintain our positive view on the company and congratulate management on all the milestone achievements spanning nearly a decade (since ISR decision) to get to this point. While fine-tuning certain project assumptions we maintain our $90 per lb LT uranium price forecast and increase our 12-month target accordingly, going to C$4.75 per share (from C$4.40 previously). Noting the recent share price strength, this implies upside of 15% from the most recent close on January 2.

On the cusp of final regulatory approval and ultimate FID, we note that Denison's nearly decade long journey with the Phoenix ISR project has finally culminated with it being construction ready today and set to become the Athabasca Basin's first ISR uranium mine. Given the estimated 2 year construction timeline, Phoenix is poised to be Canada's first new large-scale uranium mine since Cigar Lake entered production in 2014. Denison has already secured the necessary provincial approvals to conduct certain earthworks while the procurement process for the planned 2026 construction start is nearly complete (contract awards expected in early 2026). Moreover, detailed design engineering for the project is substantially complete with approximately 87% total engineering complete to date, and 92% of primary engineering deliverables issued for construction with remaining engineering, related to the latter phases of project construction, forecasted to be completed by Q2/2026.

PHOENIX CAPITAL COST UPDATE

Denison also provided an updated initial capital cost update for the Phoenix project. After accounting for increases in inflation, cost increases, and project refinements, the company now estimates the total post-FID initial capital estimate for the Project to be approximately $600M at a Class 2 cost estimate level of precision. When adjusting for inflation, updated initial capital costs have increased by 20% relative to the 2023 Phoenix Feasibility Study. Note that the updated capital cost estimate includes $65M in contingency funds and owners' reserves. Just as importantly, the construction timeline has been maintained at ~24 months.

A notable refinement to the 2023 Phoenix FS is the planned installation of large diameter wells throughout the Phase 1 mining area to enable each well to act as an injection or recovery well.  The 2023 Phoenix FS was based on approximately half of the wells in Phase 1 being large diameter and the other half being smaller diameter wells for injection only.  While this modification increases initial capital costs, it is expected to improve the operational flexibility of the wellfield, and optimize recovery rates. Though management is targeting initial production in mid-2028, we maintain our more conservative estimates (below) with commercial production achieved in 2029.

Following the August 2025 closing of a $345.0M convertible senior Notes offering, Denison maintains a strong current balance sheet with C$471.5M cash and equivalents in treasury and 2.2M lbs U3O8 held in inventory.

VALUATION & CONCLUSION

Using a LT uranium price of $90/lb, we increase our targeted NAV multiple from 1.30x to 1.40x given all the recent project developments. As such, our 12-month price objective increases to C$4.75 per share (rounded), from C$4.40 previously. Our price objective equates to upside of 15% from the most recent close on January 2. Shares of Denison Mines currently trade at a 1.23x P/NAV multiple.